Office of Finance, October 5, 1782.
Sir:
I have now before me your letters of the fourteenth and twenty-first
of last month. I am sorry to find that you are less sanguine in your
pecuniary expectations than the Governor appears to be; for I have
always found that the worst forebodings on this subject are the truest.
You will find, at the bottom of this letter, a list of all those which
I have hitherto received from you. I think they have all been already
acknowledged; but lest they should not, you will see in one moment, by
the list, whether any have miscarried.
I am not surprised to find that the contractors apply with their
paper, in the first instance, to the Receivers and Collectors. This I
expected, because much of that paper is not fit for other purposes.
Some of it, however, which is payable to the bearer, is calculated for
circulation; which you observe is not so general as otherwise it might
have been, by reason of the largeness of the sums expressed in the
notes. Mr. Duer’s letters contain the same sentiment.
In issuing this paper, one principal view was to facilitate the payment
of taxes by obviating the too general (though unjust) complaint of the
want of a circulating medium. In substituting paper to specie, the
first obstacle to be encountered, was the total diffidence which had
arisen from the late profusion of it. Had a considerable quantity been
thrown into the hands of that class of the people, whose ideas on the
subject of money, are more the offspring of habit than of reason, it
must have depreciated. That this apprehension was just, is clear from
this fact, that the paper I first issued, and the Bank paper which
came out after it, did depreciate from ten to fifteen per cent. in the
Eastern States, notwithstanding all the precautions which were used.
If I had not taken immediate measures to create a demand for it on the
spot, and to stop issues to that quarter, its credit would have been
totally lost for a time, and not easily restored. Besides that, the
quantities which were pouring in from thence would have done mischief
here. Confidence is a plant of very slow growth; and our political
situation is not too favorable to it. I am, therefore, very unwilling
to hazard the germ of a credit, which will, in its greater maturity,
become very useful. If my notes circulate only among mercantile people,
I do not regret it, but rather wish that the circulation may, for the
present, be confined to them, and to the wealthier members of other
professions. It is nothing but the greater convenience, which will
induce people to prefer any kind of paper to the precious metals;
and this convenience is principally felt in large sums. Whenever the
shopkeepers, in general, discover that my paper will answer as a
remittance to the principal ports, and will be readily exchanged by
the Receivers, they will as readily exchange it for other people. When
the people, in general, find that the shopkeepers receive it freely,
they will begin to look after it, and not before. For you must know,
that whatever fine plausible speeches may be made on this subject,
the farmers will not give full credit to money, merely because it will
pay taxes: for that is an object they are not very violently devoted
to. But that money which goes freely at the store and the tavern,
will be sought after as greedily as those things which the store and
the tavern contain. Still, however, your objection remains good; that
the traffickings in which the greater part of the community engage,
do not require sums so large as twenty dollars. This I shall readily
acknowledge: but you will observe there is infinitely less danger that
large notes, which go only through the hands of intelligent people,
will be counterfeited than small ones, which come to the possession of
illiterate men. When public credit is firmly established, the little
shocks it receives from the counterfeiters of paper money, do not
lead to material consequences; but, in the present ticklish state of
things, there is just ground of apprehension. Besides this, the value
of paper will depend much upon the interchanges of it for specie: and
these will not take place when there is a circulation of small paper.
Lastly, I have to observe, that until more reliance can be placed on
the revenues required, I dare not issue any very considerable amount
of this paper, lest I should be run upon for more than I could answer:
and as the circulation of what I dare issue, by increasing the general
mass, enables people (so far as it goes) more easily to get hold of
other money, it consequently produces, in its degree, that object of
facilitating taxation which I had in view.
I am, Sir,
Your most obedient, humble servant,
Robert Morris.
Alexander Hamilton, Esq.,
Receiver for New-York.